1. There is no provision of law directly providing for expiration of an arbitration agreement if the financial situation of a party has been so deteriorated that they are not able to incur the costs of arbitration proceedings.
2. According to well-established views expressed in the doctrine, other reasons of expiration of an arbitration agreement include, as provided for in Art. 1168 § 2 of the PCPC, first of all, the following situations directly provided for in the Polish Civil Procedure Code: refusal to act as an arbitrator by the arbitrator indicated directly in an agreement, but the refusal to act as an arbitrator may also take place in the course of the proceedings on the part of persons who have performed the function of an arbitrator so far. As other reasons preventing an arbitrator to act as such, the following reasons, in particular, are indicated: death of an arbitrator, their long-term illness, deprivation of liberty (Art. 1168 § 1 of the PCPC), as well as refusal by a particular arbitration institution and the impossibility to perform an arbitration agreement (Art. 1168 § 2 of the PCPC) and, moreover, a situation when the unanimity or majority of voices required by the agreement cannot be obtained, if the case is heard by an arbitral tribunal in a composition of more than one arbitrator (Art. 1195 § 4 of the PCPC). Another instance of the inability of an arbitration tribunal to hear a case, which is not directly indicated in Art. 1168 § 2 of the PCPC, is for example, the situation of liquidation of the permanent court of arbitration indicated in the arbitration agreement… or if it is impossible to compose the arbitral tribunal in the proceedings in a manner that is required for the resolution of the case. Their common feature is that the obstacle to perform the arbitration agreement pertains to the arbitrator or the arbitral institution indicated by the parties, and not to an external reason, in particular, relating to one of the parties of the arbitration agreement. Moreover, these are all objective circumstances of a permanent nature. Such circumstances cannot include the deterioration of the claimant’s financial situation, for example due to the fact that it may change in the future.
3. Art. 1168 § 2 of the PCPC specifies the reason for an arbitration agreement to cease to be in effect as the circumstance that the hearing of the case by an arbitral tribunal from this Court of Arbitration emerged to be impossible for other reasons, which means that this regulation puts emphasis on the occurrence of a reason of this impossibility relating to the arbitral tribunal. What is more, although the Polish Civil Procedure Code does not stipulate expressly the reasons of expiration of the legal force of an arbitration agreement, they also include granting of a final ruling by a state court in the dispute which can be decided by the arbitral tribunal, and the lapse of the time limit with the reservation of which the arbitration agreement was concluded or fulfilment of a condition subsequent stipulated in the arbitration agreement.
4. Art. 1168 of the PCPC stipulates the situation when an arbitration agreement may cease to be in effect (unless the parties have stipulated other legal consequences of occurrences covered by this provision). The enumeration contained therein is therefore purely exemplary, in this sense that the parties may indicate other situations which will result in expiration of the arbitration agreement (the arbitration agreement ceasing to be in effect). Loss of the legal force by an arbitration agreement may also take place under other circumstances than those mentioned above, in particular in the event of conclusion of a written agreement terminating the arbitration agreement. There are also other reasons related to the content of the parties’ agreement and of the arbitration agreement related thereto…, for example non-fulfilment of a condition precedent or fulfilment of a condition subsequent (Art. 89-94 of the Polish Civil Code), as well as evasion of legal consequences due to an error, deception or threat (Art. 84-87) or other events specified by the parties as reasons for the arbitration agreement to cease to be in effect.
5. There is view presented in the doctrine that that the reasons for an arbitration agreement to cease to be in effect may sometimes include termination for an important reason or withdrawal from an arbitration agreement. It is, however, impossible to share this view, because it would be pointless to conclude an arbitration agreement, if each party were to be able to evade the consequences thereof by an unilateral legal act, so without the need to cooperate with or to obtain a consent of the second party.
6. The principles arising out of the Constitution of the Republic of Poland regarding the state judiciary, including Art. 45 of the Constitution, cannot be applied to arbitration which derives its competence to resolve a dispute from a free, independent decision made by the parties themselves as to the way of exercising of their private rights… .
7. [I]t follows from Art. 147a of the Bankruptcy Law that not a mere lack of funds, but making of a declaration of will on withdrawal from an arbitration agreement results in expiration thereof.
8. Unenforceability (the inability to perform) of an arbitration agreement refers to arbitration agreements which do not infringe any mandatory provision of law and are, in fact, valid, but they present virtually insurmountable difficulties in conducting arbitration proceedings on their basis. Expiration of an arbitration agreement means a definitive discontinuation of the effects made by the agreement due to the circumstances which occurred after the agreement was made.
9. An arbitration agreement is unenforceable, if it stipulates requirements towards persons who are to be arbitrators that in fact it is impossible for an arbitral tribunal to be constituted, since it is impossible to indicate any persons who meet such requirements. An arbitration agreement is also unenforceable, if commencement of arbitration proceedings is not possible at all for other reasons, with the exception of the reasons leading to the expiration of the arbitration agreement. An arbitration agreement shall be deemed unenforceable, if it indicates, as the place of arbitration, a state in which, for obvious reasons, it is impossible to conduct arbitration proceedings (for example, due to a war in that state). An arbitration agreement that has been formulated so vaguely that it is impossible to determine its content may also be deemed unenforceable. Another example of such a situation is when the parties have concluded an arbitration agreement indicating a permanent court of arbitration at an institution which has been liquidated or the parties have concluded an arbitration agreement indicating the jurisdiction of a permanent court of arbitration which is impossible to be identified by reasonable interpretation of that indication… .
10. [I]nterpretation of Art. 1165 § 2 of the PCPC, in the scope of a prerequisite of unenforceability of an arbitration agreement, should also take into account objective and permanent prerequisites of impossibility of initiating and conducting of proceedings before this court of arbitration. Such prerequisites also include, according to the Court of Appeal, the existence of objective and permanent reasons which realistically prevent a party from covering the costs of commencement and conducting of arbitration proceedings and such objective and permanent inability absolutely results out of the evidentiary material collected in the case… .
11. There are many arguments in favour of the substantive-law nature of the arbitration agreement. For example, the fact that an arbitration agreement remains binding also for the legal successors of the parties both in terms of general and specific succession, because it is the legal relation or the object of a dispute, and not the specific parties to the dispute that are submitted to arbitration, or the fact that there are no obstacles to apply substantive law provisions regarding the capacity for legal acts, nullity of legal acts and defects of declaration of will by the assessment of the effectiveness of the arbitration award. The fact that conclusion of an arbitration agreement does not interrupt the limitation period is also in favour of the substantive nature of the arbitration agreement. Also the character of the power of attorney necessary to effectively enter into an arbitration agreement on behalf of a principal unequivocally indicates the substantive-law character of the arbitration agreement.
12. The pleading of the existence of an arbitration agreement raised by the respondent, which is consistent with the provisions of law and the purpose of the institution of the pleading of the existence of an arbitration agreement, i.e. with having the case heard before the relevant adjudicative forum, as agreed by the parties, cannot be considered a procedural abuse within the meaning of Art. 3 of the PCPC.
13. Abuse of an individual right is not a procedural activity of raising a plea of an arbitration agreement.